Processors emphasize role of global markets in the industry’s future.
TEMECULA, Calif. - Three U.S. dairy processing executives today stressed the tremendous opportunity that exports hold for the U.S. dairy industry.
Officials with Hilmar Ingredients, Leprino Foods Company and California Dairies Inc. (CDI) each emphasized the importance of foreign markets as they addressed some 120 attendees at Western United Dairymen’s 2012 Convention being held here this week.
The processors – each with dairy processing plants in California -- pointed to the world’s growing population, increasing appetite for proteins and limited dairy supplies from other countries as catalysts for U.S. dairy export growth.
“World dairy demand cannot be met by current production,” said Mike Reidy, Leprino senior vice president. “The U.S. is in a unique position and needs to capitalize on it to take advantage of the window of opportunity as customers come to our market. We need to make sure we don’t miss out on it.”
The world’s population will increase to 9 billion by 2050, up from today’s 6 billion, said Andrei Mikhalevsky, CDI’s new CEO. “Demand for food and water will be astronomical,” he said.
Seventy-five percent of the demand growth is taking place in China, India, the Middle East, Africa and Southeast Asia. As consumers’ diets in countries like China become more Westernized, foreign customers are buying more cheese. Companies like Domino’s, Pizza Hut and Papa John’s also are seeing explosive growth.
“That’s been helping drive the growth in export markets,” Reidy said.
In Asia, infant formula sells as a premium product, said Mikhalevsky. That offers infinite possibility for the U.S., which is looked upon as safe supplier. Emerging markets are also looking for whole milk powder, whey, skim milk powder, cheese, butter and value-added dairy products that can fulfill specialty needs, such as infant nutrition.
“The export market is opportunity, not an unloading ground, for U.S. dairy products,” said Kevin Hogt, vice president and general manager of Hilmar Ingredients. But, he added, “international markets demand significant investments.”
Hilmar has seen its export market increase from 22 to 44 countries in the last five years. Its top markets include Japan, China, Korea, Mexico, the Netherlands and Vietnam.
New Zealand remains a major dairy product supplier to China, but the U.S. share is growing rapidly, Reidy said. He also said the good news is that U.S. dairy exports are rising while dairy imports into the U.S. are falling.
Reidy referred to findings by Bain & Company, which looked at markets for the U.S. dairy industry in 2009 and again in 2011. In 2009, Bain & Company projected a 7-billion-pound gap between expected world milk production and demand by mid-decade. A re-analysis by Bain & Co., released last fall, reaffirmed its original findings and showed the world supply-demand gap is even wider than originally anticipated, with the U.S. a likely source to fill it.